Recently Introduced Gaming Legislation
November 25, 2005

Representative Hartnett recently introduced House Bill 384. This legislation adds a social club to the list of various organizations that qualify to be issued a license to conduct regular bingo games and instant bingo. The bill defines a "social club" for this purpose as an organization that is not organized for profit, and is organized and operated exclusively to provide recreational, patriotic, historical, cultural, or ancestral activities for its members, and that has been in continuous existence in Ohio since 1970. A social club must have received a determination letter, that is currently in effect, from the Internal Revenue Service stating that it is exempt from federal income taxation under subsection 501(a) and be described in subsection 501(c)(7)of the Internal Revenue Code.

In addition, Senator Schuring has recently introduced Senate Bill 220. This legislation modifies the definition of a skill-based amusement machine that applies to the Gambling Law.

Communities Approve Gaming Agreements
November 22, 2005

The voters in the Ohio communities of Monroe and Lordstown have approved intra-governmental agreements with the Eastern Shawnee Tribe of Oklahoma. Among other things, the agreements set a profit-sharing arrangement that will be implemented in the event that the Tribe builds casinos in those cities. The measure didn't offer citizens the opportunity to approve or reject gaming or casinos themselves - only whether the proposed agreement with the Tribe would be adopted. Nevertheless, according to the Cincinnati Post, the result offered an important glimpse into public sentiment about the possibility of casino gaming in those communities. The measure passed with a 66% approval in Butler county and 69% in Trumbull county.

Expert Witness in Land Claim Case
November 22, 2005

The Associated Press reported that Ohio Attorney General Jim Petro has engaged the services of an expert to assist in defending the State of Ohio against the land claim lawsuit filed by the Eastern Shawnee Tribe of Oklahoma. The State hired Alexander von Gernet to research the history of the Tribe in Oklahoma and to examine the merits of their land claims in Ohio. Von Gernet is from Mississaugua, Ontario, and was recommended to Petro by the Ontario Ministry of the Attorney General.

Gaming Groups Under Investigation
November 22, 2005

National Capital I and A Piece of the Action, LLC are both under investigation by the state Commerce Department according to an article in the Lima News. Both companies together have raised approximately $1.68 million toward bringing Tribal gaming to Ohio. According to the article Robert Bollinger, a partner in A Piece of the Action, LLC sold shares of the company to investors and took a commission from the sale even though he is not a licensed securities dealer. Additionally, National Capital I and its president, Tom Schnippel, have both been accused of selling unregistered securities and making false representations to investors in violation of securities laws.

According to the article, Schnippel sold $1.4 million worth of promissory notes to investors, guaranteeing a 10% return and one sixteenth of the net gaming revenues for a casino that may or may not be built in Ohio. The Securities Division also claims that National Capital I and Schnippel told at least one investor that construction on the casino "would commence soon" and that "local political opposition to the casino was irrelevant because of federal law." According to the cease and desist order, National Capital I and Schnippel failed to tell investors that "principal and interest payments would almost exclusively come from the investors' own contribution and that (National Capital I) had no other identifiable source of income to make such payments."

National Capital I spokesman Terry Casey said that the company is trying to clear up the matter, and noted that there were inaccuracies in the cease and desist order that needed to be addressed. Thomas Holtsberry, who formed A Piece of the Action, told the Cleveland Plain Dealer that the company hadn't done anything wrong. The article quotes Holtsberry as saying "We were not selling securities per se, we were recruiting business partners."

The Ohio Commerce Department's Securities Division has issued a cease and desist order until the matter can be resolved, either informally or through a hearing.

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CHAIRMAN'S COMMENTARY: Inconsistent Enforcement Standards
By Michael E. Zatezalo, Gaming Law Chair
November 1, 2005

An inconsistency in the interpretation of the Ohio Revised Code has developed between the Ohio Attorney General’s office and the Ohio Department of Commerce, Division of Liquor Control over what constitutes a “pool not conducted for profit” for purposes of Chapter 2915 of the Ohio Revised Code.  Many veterans and fraternal organizations have “daily books” where members sign in and pay one dollar ($1.00) or other consideration for a chance to win a prize.  If the member is not present when his/her name is called, there is no winner that day and the prize money increases.  This is similar to the build-up of lottery prizes.  However, the Division of Liquor Control has taken the view that such progressive sign-in pools are illegal.  As a result many veterans and fraternal groups are being charged with liquor violations for operating illegal games of chance.  The Ohio Attorney General’s has indicated that if such daily books are “winner take all” games and no money is retained by the veterans or fraternal club, they would qualify as a “pool not conducted for profit” and be legal even if the pool has a progressive prize structure.

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